Providing a community for women who want a safe space to learn about and discuss the stock market, with the ultimate goal of financial enlightenment.

01/21/2016

One of the risk management tools is called the “stop loss.” A stop loss does just what it says: It stops the loss in your investment by either manually or automatically selling your stock, ETF, mutual fund, or stock option.

Stop losses are essential if you want to live to trade another day. Due to the worst start of the year in stock market history, this week I did something I rarely have had to do in all of the 17 years I’ve been trading in the market. I had to trigger my stop losses, transferring my money from stocks and ETFs to Cash.

Risk management is an essential part of my systematic approach. This is what separates me from the average investor. I don’t invest or trade based on emotion. And most importantly I know how much I am willing to risk losing BEFORE I enter the trade. My stop losses for long term investing are set at 20%. This means that after a new high, if my investments drop 20% in value, I sell. No second thoughts.

Many prefer to let their investments free fall in hopes that it will recover in the long term. While I respect their choice, I also disagree 100%. I protected my profits from any further losses. And I promise you I am sleeping more peacefully than most as a result.

As we enter a potential bear market, I will alter my approach to be profitable in a bear market. If you want to learn more about my approach in a bear market, feel free to contact me via the Contact Us tab.

01/10/2016

Last week’s stock market performance is proof the U. S. economy is global, as if anybody still had any doubt. China sneezed and the U. S. caught a cold!

Panic (fear) in the China stock market caused a knee-jerk response by investors in the U. S. stock market and a major sell-off. As a result, the stock prices fell and the market dropped.

This is the perfect opportunity to discuss the importance of risk management and investing based on a proven systematic approach. For the past 13 years I have invested and traded in the stock market using a proven systematic approach. What does this mean? I don't make stock market decisions based on emotion! Fear is emotion. This is what separates me from the average investor.

Ladies, do you want to be average? Or do you want to be phenomenal? Learn a systematic approach to investing in the market. If not from me, then find someone!

Happy New Year!

Aneshia

P.S. – If you’re on the journey towards reaching your financial goals, no matter where you are, please share this post with the women in your lives who are important to you!

11/23/2015

This month the U.S. Treasury Department announced myRA, my Retirement Account, a starter retirement account intended to help people start saving money for retirement. It is intended for those who have not been saving and do not have access to a retirement plan from their employer.

On their website www.myRA.gov, myRA is being presented with the following advantages:

- Simple, Safe, Affordable

- No cost or fees

- No complicated investment options

- No risk of losing money

- Allows contributions to be withdrawn at any time without penalty

So let me dissect this a little further. myRA is “simple” because it’s basically a savings account. It is “safe” because, like a savings account, you are guaranteed not to lose money. The interest rates are typically higher than a bank savings account, with an annual rate of return of approximately 3%. So, with an inflation rate of approximately 3%, at least you won’t lose any buying power. It is “affordable” because there are no fees, as is the case for many other investment vehicles.

Ladies, don’t get it twisted. myRA is NOT a retirement account and it is misleading for you to believe so. The name myRA is misleading. myRA really should be called myEFA because it is an Emergency Fund Account, rather than a Retirement Account. The function of a retirement account is to provide income to the investor once they are retired. The function of a retirement account is NOT to provide income to the saver when they hit a rough patch financially and need to dip into their account to make it through. A retirement account is not supposed to be your piggy bank.

A myRA allows contributions to be withdrawn at any time without penalty, similar to a savings account. One of the reasons a retirement account has a withdrawal penalty is to act as a deterrent for dipping in to it before you retire. With an myRA that deterrent no longer exists and the saver is relying on will power to prevent withdrawals. Once again, myRA is not a retirement account.

The maximum annual contribution for a myRA for those under age 50 is $5,500. And you are allowed to save up to $15,000 before transferring to a Roth IRA, an ACTUAL retirement account.

As quoted on the www.myRA.gov website, “Open a myRA, build up savings, then move on to other investments.” – Ladies, remember this! myRA is not intended to be a long term retirement solution.

myRA is intended to allow you to save money, make a little interest to account for inflation, avoid the fees of other savings plans, and then transfer your myRA account to a Roth IRA. If your employer does not provide a 401k or Roth IRA option, and you do not feel comfortable setting up a self-directed Roth IRA, then myRA could be a decent option. Something to keep in mind: As you are saving money in your myRA, the sooner you get trained on how to make money in the stock market (including risk management so that you no longer fear losing money and FOCUS on making money), the sooner you can make 3% per MONTH, not 3% per year.

Education alleviates fear!

Peace and blessings to you!

Aneshia

P.S. – Ladies, if you know the importance of financial independence, please share this post with the women in your lives who are important to you!

03/30/2015

Earlier today I was listening to a financial segment on the radio. When asked how investors could capitalize on the Kraft-Heinz merger, she said the best way would have been to have already purchased mutual funds. It’s no surprise that this person was a financial advisor. They have been preaching the same old thing for several decades now - buy mutual funds. And that’s because their job is to - sell mutual funds.

Yet, there are other ways to make much more money on both of these companies prior to the merger. Trading options and writing covered calls are just two of the ways. If you’re weary of too much risk, then write covered calls. If you’re more adventurous, then trade options. And even after the merger, you can still use these techniques.

Looking at the 6-month trend chart of Kraft (which has now become Kraft-Heinz a few days ago), there was enough volatility in the stock price to have made triple digit profits if you were trading options and double digit profits if you were writing covered calls in the last 6 months. If you were like most investors, you bought and held and would have made around 10%. But if you’re like me, then you’re not like most investors. I don’t care about what the average investor is doing especially when I know how to make much more in a shorter amount of time.

Now I understand that for some the roller coaster ride of the stock market may be a little unsettling. I’ve been on it for 17 years now. The key to my success has always been to use the volatility to my advantage AND manage my risk. Using the volatility to your advantage is your offense, and managing your risk is your defense.

03/26/2015

How many of you believe in spending money because it is tax deductible?

For those of you who like to spend money solely because the expense is tax deductible, then I have a deal for you. How about you give me a dollar, and I will give you 30 cents back. Sound like a good deal for you? I didn’t think so. Yet, this is exactly what happens when you spend money for the sole purpose of getting a tax refund. In fact, I have overheard conversations between people, where they use spending additional money on a home mortgage versus what they are currently spending for rent because they can write off the interest. Now, don’t get me wrong, as there is nothing wrong with buying a house to help build wealth by increasing your net worth.

But, frankly, most folks have got it backwards. The financially free and literate do not spend money for the sole purpose of getting a tax refund. Instead, they learn ways to deduct expenses that they already have anyway through a legitimate business.

I started my first business twelvve years ago. In essence, I was able to reduce my yearly tax bill by employing a simple financial model used by business owners. Basically, it goes like this: Business owners take in income, incur business expenses, which they deduct, and pay taxes on the rest. Employees on the other hand use another financial model. They take in income, pay taxes, and use the rest to pay for their expenses.

However, I want to re-iterate the statement I made earlier. The key here is not to spend more money in order to deduct the expenses from your taxable income. That would be like spending $1.00 in order to get $0.30 back. But, if you already have existing expenses, which can be legitimately claimed as business expenses, this is where owning a business can pay serious dividends.

Consider the following scenario to illustrate this principle:

Say you have a business owner and an employee who each make $100,000 per year. Assume they are both taxed at the same rate of 30%. The business owner spends $40,000 in business expenses. What is the result? Well, the tax bill of the business owner would be substantially different. Why? Remember the financial model.

The business owner makes $100,000, but she gets to subtract the $40,000 from the original $100,000 and pay taxes on the rest. So, the resulting taxable income is $100,000 minus $40,000 equaling $60,000. 30% of $60,000 is $18,000. The business owner pays $18,000 in taxes.

Now on the flip side, the employee makes $100,000 and is immediately taxed. 30% of $100,000 is $30,000. The employee pays $30,000 in taxes.

Ladies, this is a $12,000 advantage that the business owner has. That is $1000 per month. As the saying goes, “a penny saved is a penny earned.” So in this case, a $1000 saved is $1000 earned. What would you do with an extra $1000 per month?

If you are wondering where to get the extra money to start building wealth, this could be it. You have probably already got it, and it is in the form of your existing tax bill. Find a way to reduce your taxes.

08/01/2014

I read in a recent article that a builder of mixed income housing in New York City recently gained approval to have separate entrances for residents based on income.

My initial thought was segregation was declared illegal 50 years ago, so why is it coming back now? My second thought was "What in the hell is this builder thinking?"

I wonder whether he has always been socially inept and arrogant. Was he entitled as a wealthy kid or did it come later as he rose from poor to rich? If he is someone who let money change him for the worse, then there probably wasn't much of an identity to change in the first place.

Atlanta has mixed income housing located in prominent areas throughout the city. There is absolutely no way that I would want to own a condo in a building where the entrances were segregated based on income. But then again, I wasn't raised that way. I wasn't raised to be offended by the mere presence of someone who made less money than me.

I have learned that in most cases, money makes you more of what you already are. If you were compassionate and giving when you had little money, you'll likely be compassionate and giving MORE when you have more.

And if the wealthy resident of this new building has the mentality that agrees with separate entrances, then maybe it's the lower income resident who needs protection from the wealthier resident and not the other way around.

07/28/2014

Small cap stocks are companies with a market capitalization of less than $5 billion. By the way, this number is not set in stone by some standard; it’s approximate based on who you talk to. Market capitalization is determined by multiplying the number of shares of stock a company has by the stock price. If this result is less than $5 billion, you’ve got a stock that may be good for short term options trading.

Why? Because short cap stocks tend to be more volatile. You’ll make more profit trading options because options thrive on volatility. Options are leveraged. So, if the stock price of a company goes up 5%, the call option on that company may go up 40%. This ratio of how the stock price change impacts the options price change is known as the delta. And it is different for every company.

Owning a call option gives you the right to buy a stock at a particular price, known as the strike price. With a call option, you don’t actually own the stock, but you do control the stock. If you choose to exercise your option, the person who sold you the call option is required to sell you their stock at the strike price. This puts you in control. In essence, you’ve got the wheel!

So the next time someone tells you that small cap stocks aren’t the best investment because they don’t pay dividends, you’ll know the truth. The amount of money you can make trading options will make dividends look like pennies on the dollar.

07/23/2014

Recently, I read an article where a billionaire CEO suggested that his company’s employees should have a 3-day work week. At first I thought “oh, this is great!” Then, I quickly remembered that because employees tend to think differently than a business owner, there must be a catch. And of course, the catch is the employees have to work extended days and delay retirement until they are 70.

Knowing what I know about active, leveraged, and passive income, I thought this guy must be nuts!

I had to remember that I think like a business owner more so than an employee and I know how to gauge a financial opportunity based on how much time it frees up for me. I can always make more money, but I can never get more time. Once time is gone, there is no getting it back.

Most professional women make money in the form of active income. They trade their time, 40 hours a week or more, for a paycheck.

But if our financial freedom goal is to free up our time, then we have to figure out how to trade less than 40 hours a week for the same paycheck amount.

If I work less than 40 hours a week for the same paycheck amount, then I have to charge a higher hourly rate for my time. There are many ways to develop leveraged income: you can become a consultant where your hourly rate well exceeds your rate as an employee. Is there risk along with this decision? Of course! But then again, since when is your job as an employee guaranteed? The job where you work for the same company for 40 years and retire with a pension is long gone in most cases.

Now the ultimate is trading 0 hours for a paycheck. When you’ve discovered a way to do this, you’re now making passiveincome. Can you imagine being paid by a business you own while you’re out on vacation with your family? For me, the stock market has become that tool. But there are other ways to make passive income: own a parking lot, or a vending machine, or an affiliate website.

3) Give - for the money you want to give to charity, church, or someone you want to help.

4) Nec - short for Necessities for the money to handle your bills.

5) Play - for the money to enjoy life's pleasures.

Notice I saved the best for last. If you have a Play account for money you have to blow every month, you are much less likely to sabotage your FFF account. You still make sacrifices but it makes sacrificing in other areas much easier.

I've seen programs from people who say you have to practically starve yourself (Go without utilities, etc.) in order to reach your financial goals. To each, their own. I know life was not meant to be difficult. Yes, challenges here and there, but a struggle? Absolutely not! When you find your flow, get into a rhythm of financially responsible habits, things fall into place.

Here's a simple check on your financial condition: just look in your kitchen pantry. Are things in order, or does it take you 10 minutes to locate that canned good?

How you manage your money is key to being financially successful. Respecting and valuing money go hand in hand. If your kitchen cabinet is a mess, chances are your finances are too. But it doesn't have to stay that way. Start now.

Follow the simple money management approach I noted above and watch your world change. It worked for me and it can work for you too!

06/19/2014

Last week at a networking luncheon, I ran into a lady, who remembered me as the one who “plays” the stock market. As in “playing slots in Vegas”? or maybe “playing games”?

Now, I can assure you there is no play involved when I invest in the stock market. It is a business for me and I treat it as such.

In the past 15 years of investing and trading in the stock market, I have learned a lot from my conversations with other women. For one, I have discovered many misconceptions about the stock market. In the interest of personal growth, I am open to learning new things. So, once I’ve discovered that what I used to think about a particular topic is based on insufficient information, I find myself opening up to a new perspective.

So, how do some women allow their mind to take them out of the financial game? Well, while our mind can be extremely powerful, its desire for security and resistance to change can also keep us from stepping out of the box to reach our goals and dreams.

Stock Market MythTrading or investing in the stock market is like gambling.

Some ladies believe that trading in the stock market is like gambling. Truth be told, trading in the stock market is only like gambling when you don’t use a systematic approach. So for many women, I am sad to say, it is not merely “like” gambling…it IS gambling. Only this time, your retirement or family’s future is at risk, not just a few dollars you put in the slot machine.

This used to be the case for me back in the late 90s when I had very little knowledge about the stock market and all I had was my 401k. My investment decisions were based on my emotions or even worse, someone else’s expertise without understanding their methods for selecting stocks. It can be difficult to understand someone else’s methods especially when they don’t have any. You’re better off opening up the financial section of a newspaper, closing your eyes, and pointing your finger at the page.

Now that I trade and invest based on a systematic approach, the odds are definitely in my favor that I will be profitable and continue to be into the future. And for those of you who don’t want to trade, but still want to be able to monitor the funds you select in your 401k or IRA investments, then there is a systematic approach that can work for you too.